INTRODUCTION

Countries seek to expand the export of their goods to foreign markets because this promotes economic growth, investment and income generation. Similarly, foreign countries export their products to South Africa to gain similar economic benefits.¹

However, this cross-border trade creates competition, and to ensure fairness, import and export markets must be regulated. One key area of regulation is “dumping,” which can harm domestic industries if left unregulated.²

WHAT IS “DUMPING”

Dumping occurs when goods are sold in another country at a price lower than in the local market of the exporting country.³ In simple terms, a company sells a product abroad for less than it charges for the same product in its home market.

This practice can harm domestic industries because imported goods may gain an unfair advantage over locally produced products.⁴ Therefore this practice harms manufacturers and compromises their market position in the respective region.

The export price is the price the goods are sold for when exported to another country. The normal value is the price those same goods normally sell for in the exporter’s own country.⁵

THE ROLE OF INTERNATIONAL TRADE ADMINISTRATION COMMISSION WITH ‘’ANTI-DUMPING’’ PRACTICE

In terms of the International Trade Administration Commission Act⁶, the International Trade Administration Commission (“ITAC”) investigates alleged dumping in the Southern African region to determine whether imported goods are harming the market and whether customs duties should be amended.⁷

POWERS OF THE MINISTER OF TRADE AND INDUSTRY AND THE MINISTER OF FINANCE

Based on ITAC’s recommendations, the Minister of Trade and Industry and the Minister of Finance have the duty to, impose, withdraw, or reduce customs duties.

WHAT IS ‘’LESSER DUTY RULE’’?

The World Trade Organisation has established the lesser duty rule to eliminate harm on the domestic markets caused by dumping which sets the maximum anti-dumping duty at 25%.⁸

In simple terms, the rule compares two figures: the dumping margin and the injury margin. The anti-dumping duty that is imposed, is the lower of these two amounts.⁹ The rule is applied at the relevant authority’s discretion and generally requires cooperation from both the importer and exporter.

THE LUCKY CEMENT INVESTIGATION

ITAC investigated whether cement exported from Pakistan to South Africa was being dumped at unfairly low prices.¹⁰

ITAC calculated a dumping margin of 93.62%, meaning the export price of the cement was significantly lower than its normal value in Pakistan.¹¹ However, Lucky Cement argued that ITAC’s calculation contained errors and that the correct margin should have been 81% and requested a review of this amount.¹²

REVIEW BEFORE THE PRETORIA HIGH COURT

The Pretoria High Court (“the High Court”) had to determine if calculations by ITAC was reviewable in terms of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”).

Lucky Cement made the following submissions to the High Court:

• The ITAC misdirected itself in the calculation of certain adjustments to the normal value versus export price of the product;
• That the ITAC’s final report was “irregular” as it made material mistakes of facts; and
• The ITAC had misapplied the Anti-Dumping Regulations in its final report.¹³

THE PRETORIA HIGH COURT’S FINDINGS

The Pretoria High Court held that the “anti-dumping” calculations are extremely technical and requires a specialised expertise for a specific institution in this case, the ITAC. Therefore, the courts tend to be slow to interfere with the decision of a specialised institution.¹⁴

In terms of PAJA, the court held that the ITAC did not conduct themselves in a manner that was arbitrary or ignored all factors for purposes of their report.

The court further held that this argument was not material. Under the lesser duty rule, there is a maximum anti-dumping duty of 25%, even if the calculated dumping margin is higher. Since both 93.62% and 81% exceed 25%, correcting the calculation would not change the final duty imposed.¹⁵ Therefore, the anti-dumping duty would remain 25% regardless of the alleged error.

The court also concluded that Lucky Cement failed to demonstrate that ITAC’s decision was reviewable under PAJA.

CONCLUSION

This case illustrates that parties should exercise caution when attempting to challenge ITAC’s findings on anti-dumping duties. Courts are likely to defer to ITAC’s expertise, and procedural or calculation errors may not alter the outcome, particularly when the lesser duty rule applies.